TMI Blog1963 (7) TMI 87X X X X Extracts X X X X X X X X Extracts X X X X ..... spute that the assessee is a company in which the public are not interested. It is also not in dispute that action under section 23A could be taken against this assessee company provided the conditions mentioned therein are fulfilled. We are here concerned with the assessment year 1951-52, the accounting year being the calendar year ending 31st December, 1950. The profit and loss statement of the assessee company showed a profit of ₹ 61,483-10-6. The balance-sheet further showed that there was a loss amounting to ₹ 30,956-9-8 incurred in the previous year which was brought forward to this year and adjusted against the profits of the company. In the result the balance-sheet showed the resulting profit at ₹ 30,527-0-10. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d be taken into consideration in determining the question of smallness of profits and the reasonableness as to the declaration of a higher dividend. The Tribunal has overruled this contention and the decision appears to be influenced by the fact that the assessee company had a general reserve of ₹ 41,337 which had been created out of the distributable profits of the previous year. On a requisition made by this court, the Tribunal has submitted a statement of the case and referred to this court the question quoted above. In our judgment, the answer will have to be in favour of the assessee. It is well settled that in considering the question as to the reasonableness or otherwise of the distribution of dividend what has to be taken i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the hands of the company were about ₹ 45,000 to ₹ 46,000. The company had only distributed ₹ 29,000 and odd. Had the matter rested here we would have no hesitation in upholding the decisions of the Appellate Tribunal that the assessee company could reasonably have distributed a larger dividend. But the matter does not rest there. It is the company's case that it had incurred a loss in the previous year to the extent of ₹ 30,000 and that according to the assessee company had to be taken into account in considering the question whether an order under section 23A of the Income- tax Act should be made or not. The contention of the assessee company is well-founded on the language of the section as it then stood wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0 and odd, the balance that comes is about ₹ 15,000. The company has already distributed dividend to the extent of ₹ 29,000. In these circumstances, in our opinion, the Tribunal was not justified in holding that this was a case in which an order under section 23A of the Income-tax Act should be made. It has been argued on behalf of the revenue that the commercial profits ascertained are not ₹ 61,483 but ₹ 61,483 plus ₹ 24,375 received by the assessee company from Messrs. Shah Trading Company Limited and which have been included in the assessable income of the company. There is a slight difficulty in the way of Mr. Joshi because the statement of the case proceeds on the footing that the amount of commercial p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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